IPSASB International Sustainability Reporting Standards for the Public Sector

The international sustainability reporting and disclosure process has been conceptualized. Learn what you need to know and what you need to do.

By Elizabeth Gousse Ballotte, Partner and Umer Dangra, Manager

Sustainability and climate change remain pressing global issues. While governance bodies expect compliance with existing regulations, there has been no single international reporting framework to guide the public sector. Until now. In October 2024, the International Public Sector Accounting Standards Board (IPSASB) released its first exposure draft (ED1) of new Sustainability Reporting Standards (SRS). This SRS ED1 is open for public comment and feedback until February 28, 2025. Second Half 2025 is the IPSASB timeline for pronouncement of their final standards.

What You Need to Know … and Why

Like every other sector and organization, governments and agencies should also be accountable for sustainability reporting to demonstrate social responsibility and commitment to the environment. The IPSASB draft standards are in response to the 2022 World Bank report calling for a public-sector sustainability reporting framework, designed to link financial, economic and climate-related impacts and address the broader role and mandate of the public sector.

The proposed standards aim to support global climate action by proposing guidance aligned with climate-related disclosures issued by the Task Force on Climate Related Financial Disclosures (TCFD) and Standards 1 and 2 (S1/S2) of the International Financial Reporting Standards (IFRS). The proposed standards also leverage the multi-stakeholder approach of the Global Reporting Initiative (GRI).

The IPSASB SRS ED1 is designed to help public entities shift from qualitative claims to quantitative measurement of performance and progress against holistic sustainability metrics. The reporting standards provide principles for disclosing sustainability information along with general financial reporting to promote accountability and decision making about climate-related:

• Risks and opportunities to a public entity’s own operations.
• Public-policy programs and their outcomes.

Also important to know is the why behind international sustainability reporting standards for the public sector. Sustainability programs help align long-term initiatives with their goals. Having a measurable framework that supports accurate and transparent reporting is vital to program success. Other benefits of public-sector disclosures of sustainability data, as per the IPSASB, include:

• Driving transparency and accountability.
• Exposing areas of improvement to help define the right efforts toward effective sustainability.
• Promoting peer review among different public sector entities resulting in ramping up the efforts to be more sustainable.

What You Need to Do

In addition to providing any feedback that you may have to the IPSASB about their proposed standards by the February 28, 2025 deadline, below are other important actions you can take:

• Create a Comprehensive Strategy: Begin by helping your public entity create a comprehensive strategy that addresses short- and long-term goals, policies, reporting and data management infrastructure. Each of these elements is important in tracking progress toward realizing your organization’s sustainability objectives, as well as complying with international reporting standards.
  
  
• Build Transparency: Also important in adopting sustainability programs and meeting regulatory requirements is building transparency throughout the supply chain and with capital allocators, customers and employees.

• Understand What the IPSASB is Proposing with their New Sustainability Reporting Standards: Aligned with guidance and standards provided by both the TCFD and IFRS — as well as leveraging the GRI’s multi-stakeholder focus — the IPSASB SRS ED1 proposes that a public entity affects and is affected by climate through:

• • Its Own Operations: Consider climate-related risks and opportunities that could affect your entity’s day-to-day activities. Expected to be applicable to all public-sector entities, this may include all public-sector activities such as service delivery, policy design and implementation.

• • Public-Policy Programs: Consider climate-related public-policy programs and their intended outcomes. This may include programs such as laws, regulations, taxes, subsidies, etc., with a primary objective to achieve climate-related outcomes. This will only be applicable to selected entities responsible for outcomes of climate-related public policy program.  

The IPSASB SRS ED1 also proposes adopting Four Pillars of Reporting related to Own Operations and Public-Policy Programs, as below:

Last, the IPSASB SRS ED1 proposes four additional reporting requirements:

• General Requirements: Relating to location of reporting, timing of reporting, comparative information, statement of compliance, judgment, uncertainties and errors.
  
  
• Fair Presentation: Depiction of climate-related risks and opportunities and, where applicable, climate-related public-policy program outcomes that are complete, neutral and free from material errors.
  
  
• Connected Information: Disclosure should be connected across the reporting entity’s general purpose financial reports to enable user understanding of these connections.

• Material Information: Definition of material information should be aligned with the IPSASB Conceptual Framework.

We Can Help

PKF O’Connor Davies can support you in a number of ways with your understanding and adoption of international sustainability reporting standards. Our professionals can support your entity’s implementation of the framework and help establish processes to comply by assessing your current controls to ensure completeness, accuracy and validity, conducting compliance reviews and delivering ongoing support as standards, rules and regulations are published or updated. Other sustainability-related services we provide include strategy consulting, outsourced sustainability office, risk management and compliance and assurance.  

Contact Us

We welcome the opportunity to answer any questions that you may have related to the IPSASB proposed new standards or any other accounting, audit, tax or advisory matters. Please contact your PKF O’Connor Davies client service team or:

Elizabeth Gousse Ballotte
Partner
eballotte@pkfod.com

Umer Dangra
Manager
udangra@pkfod.com